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Vientiane - CIMB Thai Bank (Vientiane Branch) is providing loans in Lao kip worth US$8 million to ACLEDA Bank Lao, to help boost financing for the country’s micro, small, and medium enterprises (MSMEs), including those in the agricultural sector.The Lao bank aims to triple its MSME lending to about $236 million through over 52,500 loans by the end of 2017. "Our business is centered on micro, small and medium enterprises whose demand for finance is huge. Serving the sector will bring us opportunities for growth and expansion," said Narin Phon, managing director and chief executive officer of ACLEDA Bank Lao. "We appreciate IFC's support in connecting us with CIMB Group for much-needed long-term funding to promote our core business." MSMEs are an important part of the economy of Lao PDR and employ a large part of the population. Yet, access to finance is seen as a key obstacle to their business growth and expansion since lending is primarily based against collateral. The local currency loan is fully guaranteed by IFC, a member of the World Bank Group. The guarantee enables CIMB Group to make an on-shore funding in local currency to a financial institution in Laos. "IFC and CIMB Group have developed a close relationship to support private enterprises Asean-wide and we hope to do more together in the region," said Subhak Siwaraksa, President and Chief Executive Officer CIMB Thai Bank.
Adel Meer, IFC's Financial Institutions Group Manager for East Asia and the Pacific, noted that the local currency loan would mitigate currency risks. "We expect to replicate this model in other emerging markets in the region and beyond."
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